How to Draw Fibonacci Projection Stock Indices Indicator Tool on Downwards Indices Trend

Indices Trading Draw Fibonacci Projection for Indices Downtrend?

We draw the Fibonacci Projection indicator tool from chart point 1 to chart point 2 to chart point 3 as shown on the stock indices trading example explained and illustrated below. Remember we always draw this Fibonacci Projection tool in the direction of the indices trend. In the Fibonacci Projection example explained and illustrated below, can you figure what direction we have drawn it? That is right - downward direction.

As a indices trader you would also have used Fibonacci Projection level 100.0%, just where the stock indices price reached as shown on the Fibonacci Projection example explained and illustrated below. That would have been a good take profit area.

How to Draw Indices Trading Fib Projection on Downward Indices Trend - How to Draw Fibonacci Projection on Down Indices Trend

From the Fibonacci Projection indicator tool example above, after drawing this Fibonacci Projection indicator tool there are two levels that are used to show the profit taking levels, these two Fibonacci Projection levels are drawn as horizontal lines across the stock indices chart marked as 61.8%Fibonacci Projection Level and 100% Fibonacci Projection Level.

Explanation of How to Draw Fibonacci Projection Levels on Stock Indices Charts

We use Fibonacci Projection levels to estimate where the indices trend movement will reach. There are 2 commonly used Fibonacci Projection levels; 61.8% Fibonacci Projection Level and 100% Fibonacci Projection Levels, these are used for setting taking profit levels.

To draw Fibonacci Projection levels on the stock indices chart we wait until the stock indices price retracement is complete and the stock indices price starts to move in the original direction of the Indices trend. Where the stock indices price retracement reaches is used as chart point 3. Fibonacci Projection Indicator tool is drawn using three chart points as shown on the stock indices trading example explained and illustrated below of how to draw the Fibonacci Projection Indicator Tool.

The Fibonacci Projection example explained and illustrated below shows the 3 Chart Points where the Fibonacci Projection indicator is drawn, marked as Chart point 1, Chart point 2 and Chart point 3.

Chart point 1 is where the indices trend started, Chart point 2 is where the indices trend pulled back and retraced and Chart point 3 is where the stock indices retracement reached as shown on the Fibonacci Projection Indicator Tool example explained and illustrated below.

How to Draw Fibonacci Projection Stock Indices Indicator Tool on Downwards Indices Trend

Please note where these Fibonacci Projection levels are drawn - Fibonacci Projection levels are drawn above the Fibonacci indicator, these are the chart points where a indices trader will set the take profit orders using these Fibonacci Projection Levels - 61.8% Fibonacci Projection Level and 100.0% Fibonacci Projection Level.